Louisiana-Pacific Corp. has reached a friendly deal to acquire Vancouver-based Ainsworth Lumber Co. Ltd. for more than $900-million (Canadian).
Nashville-based Louisiana-Pacific said Wednesday that Ainsworth's largest shareholder, funds managed by Brookfield Asset Management Inc., have agreed to support the transaction.
The private equity funds managed by Toronto-based Brookfield own 54 per cent of Ainsworth, which operates four plants in Canada that produce oriented strand board. OSB is a rival to plywood that is used in home construction and also for covering windows before storms.
"This transaction provides immediate value and liquidity to our shareholders, as well as the opportunity to participate in LP's continued growth as a global leader in strand-based products and technologies," Ainsworth chief executive officer Jim Lake said in a statement.
The Canadian maker of OSB has operations in British Columbia, Alberta and Ontario.
Louisiana-Pacific is offering a cash-and-stock deal valued at $3.76 a share, which is a 30-per-cent premium to Ainsworth's closing share price of $2.89 Tuesday on the Toronto Stock Exchange. Ainsworth shares rose five cents to close at $2.94 on Wednesday, before the deal was announced.
The buyer will also assume Ainsworth long-term debt, which was listed at $379-million at the end of the second quarter. Based on nearly 241 million shares outstanding, the equity value of the purchase is worth roughly $905-million.
"Ainsworth has very high quality assets and provides us with an expanded suite of strand-based products and technologies, additional access to key international growth markets, particularly in Asia, and enhanced scale and efficiencies in North America," Louisiana-Pacific CEO Curt Stevens said in a release from Nashville.
The U.S. company, a leading maker of wood building materials, made its first foray into Canada in 1978.
In the first half of this year, Ainsworth posted a $38.9-million profit, compared with an $11-million loss in the same period last year. Ainsworth has benefited from the rebound in the U.S. housing market. Sales in this year's first half surpassed $269-million, up from $175-million in the same period of 2012.
After a court-approved plan of arrangement, at least two-thirds of votes cast by Ainsworth shareholders at a special meeting set for October will be required to help complete the transaction.